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CME: Expectations for 1 Jan 2019 Cattle Inventory

09 October 2018

US - We are to the point in the year when questions are starting to be seriously asked about expectations for 1 January 2019 cattle inventory. Today’s article will focus on beef cow inventory and the slaughter levels in the fourth quarter that will take us there, writes Steiner Consulting Group, DLR Division, Inc.

A quick recap of 1 January Cattle Inventory in 2018, which indicated that the number of beef cows that calved is 31.7 million head and 6.1 million heifers held for beef cow replacement. Drought and high numbers of heifers placed into feedlots suggest the growth rate in the cow herd has slowed significantly or stopped.

LMIC forecasts are in the camp that beef cow inventory on 1 January 2019 will likely be slightly above 1 January 2018 based on current female beef slaughter levels to date and the proportion of that figure relative to 1 January 2018 cow numbers.

The combination of Federally Inspected heifer slaughter and other cow (non-dairy type) through the first eight months of the year was 8 million head, about 9.4 per cent above last year. If that number held the rest of the year, it would indicate that 1 January beef cow inventory would be nearly exactly even with a year ago.

The preliminary weekly slaughter data available for September shows female beef slaughter was 5.5 per cent larger than 2017. This would bring the year to date value down to 8.9 per cent, bringing 1 January 2019 slightly above a year ago if that number holds.

LMIC estimates annual beef cow and heifer slaughter will need to be about 9 per cent to 9.5 per cent above year ago to maintain a beef cow herd even with the prior year. This is only possible if the fourth quarter continues to slaughter high levels of female beef-type animals at a level that is over 9.2 per cent for the quarter. September’s slowing slaughter rate suggests this is unlikely.

Using the relationship between heifer and beef cow slaughter, we estimate that annual slaughter levels would need to be 15 per cent above a year ago in order for the beef cow inventory number on 1 January to be 1 per cent below the 31.7 million estimated on 1 January 2018.

Similarly, in order for 2019’s 1 January beef cow inventory to be up a full 1 per cent, beef cow and heifer slaughter would need to moderate in the fourth quarter to reach an annual percentage increase of 3.3 per cent above last year.

By our estimates, female beef slaughter is likely to moderate in the fourth quarter, but is unlikely to be pulled down as far as to cause a 1 per cent gain in the 1 January figure. Our current estimates put annual female heifer and beef cow slaughter up 8.4 per cent year-over-year, leading to an estimate of up 0.2 per cent-0.5 per cent on 1 January.

With one full quarter left to the year, these estimates are subject to change and use normal relationships to set predictions. Heifer and beef cow slaughter will be the number to watch moving forward with a keen eye to see if these relationships will hold this year.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

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